Dissertation
PCAOB inspection of audit firms and client financial statement restatements
Doctor of Philosophy (Ph.D.), Drexel University
Sep 2021
DOI:
https://doi.org/10.17918/00000889
Abstract
This study examines whether auditors' deficiencies identified in the Public Company Accounting Oversight Board (PCAOB) inspection reports are representative of the auditors' deficiencies and indicative of misstatements in their clients' financial reports. Using manually collected data from 2002 to 2016, I examine whether the deficiencies captured in the PCAOB inspection reports relate to the audited companies' accounting misstatements in the restatements. I test two accounting areas-revenue and goodwill-which are either the largest cause of restatements (revenue) or are more likely to have disagreements between auditors and the PCAOB's inspectors (goodwill) in terms of the nature of the accounts. The results show that clients of auditors that receive revenue-related deficiencies in the PCAOB inspection reports are likely to restate revenue-related accounting issues, whereas there is no such association between goodwill-related deficiencies and goodwill-related restatements. Furthermore, I filter out the auditors' clients based on their exposure to audit deficiencies and find that clients with higher exposure to revenue- and goodwill-related deficiencies are more likely to restate revenue- and goodwill-related accounting issues, respectively. Additionally, goodwill-related audit deficiencies that are departures from GAAP are more likely to be associated with goodwill-related restatements than non-GAAP goodwill deficiencies, whereas revenue-related deficiencies do not differ between GAAP and non-GAAP deficiencies. The findings show that the relationships between audit deficiencies and restatements vary among different accounting areas, and these relationships are affected by the severity of the deficiency and the client's exposure to the deficiency.
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Details
- Title
- PCAOB inspection of audit firms and client financial statement restatements
- Creators
- Yufei Wang
- Contributors
- Hiu Lam Choy (Advisor)Anthony Paul Curatola (Advisor)
- Awarding Institution
- Drexel University
- Degree Awarded
- Doctor of Philosophy (Ph.D.)
- Publisher
- Drexel University; Philadelphia, Pennsylvania
- Number of pages
- x, 70 pages
- Resource Type
- Dissertation
- Language
- English
- Academic Unit
- Accounting; Bennett S. LeBow College of Business; Drexel University
- Other Identifier
- 991015684143504721